Chapter 5 - Strategic capability and competencies Flashcards
Sources of strategic capability
What does the resource-based approach view as sources of strategic advantage?
Resources and competencies as sources of strategic advantage.
Sources of strategic capability
What are the two types of resources that contribute to competitive advantage?
Tangible resources and intangible resources.
Sources of strategic capability
How are resources and competencies assessed in terms of competition?
As basic/threshold (minimum required) or unique/distinctive (providing an advantage over competitors).
Sources of strategic capability
What are threshold resources and competencies?
Threshold resources are the minimum level of resources required to compete, and threshold competencies are the minimum competencies required to compete.
Sources of strategic capability
What are unique resources?
Resources that are difficult for competitors to imitate, valued by customers, and provide a competitive advantage.
Sources of strategic capability
What are core competencies?
The activities and processes through which resources are deployed to achieve competitive advantage in ways others cannot easily imitate.
Sources of strategic capability
What are the categories of resources?
Tangible resources, intangible resources, and human resources.
Sources of strategic capability
What are tangible resources?
Financial and physical resources, including funds, land, buildings, machinery, and equipment.
Sources of strategic capability
What are intangible resources?
Resources with no physical existence, including culture, brand recognition, intellectual property (e.g., patents, trademarks).
Sources of strategic capability
What do human resources include?
The skills, knowledge, and experience of employees, as well as the way they work together and their motivation.
Sources of strategic capability
What are the three distinct capabilities that add value, according to Kay (1993)?
Architecture (network of relationships), reputation, and innovative ability.
Sources of strategic capability
What is competitive advantage?
The ability to generate greater returns than competitors over the long term through unique resources and core competencies.
Sources of strategic capability
What are the two basic types of competitive advantage identified by Porter (2004)?
Cost advantage and differentiation advantage.
Understanding, achieving and sustaining competitive advantage
What is the VRIO framework for assessing strategic capability?
A framework assessing resources and competencies based on Value, Rarity, Inimitability, and Organizational support.
Understanding, achieving and sustaining competitive advantage
What does ‘value’ mean in the VRIO framework?
The worth placed on resources or competencies by a customer or organisation, based on their ability to exploit opportunities or neutralize threats.
Understanding, achieving and sustaining competitive advantage
What does ‘rarity’ mean in the VRIO framework?
A resource or competence is rare if it is not generally available to competitors, thus creating competitive advantage.
Understanding, achieving and sustaining competitive advantage
What does ‘inimitability’ refer to in the VRIO framework?
Resources or capabilities that are difficult for competitors to imitate, based on complexity, causal ambiguity, or culture/history.
Understanding, achieving and sustaining competitive advantage
What is ‘non-substitutability’ in the context of competitive
The inability for competitors to substitute a company’s capabilities with other options, maintaining the advantage.
Assessing strategic capability
Why is it important for an organization to continually assess its internal capabilities?
To ensure that the internal capabilities align with the requirements of external customers.
Assessing strategic capability - Supply Chain Analysis
What role does supply chain analysis play in an organization?
It identifies how an organization’s resources are inputs that need to be transformed to add value, creating a unique selling point (USP).
Assessing strategic capability - Value Chain Analysis (primary activities)
What are the primary activities in Porter’s Value Chain?
Inbound logistics
Operations
Outbound logistics
Marketing and sales
After-sales service
Assessing strategic capability - Value Chain Analysis (support activities)
What are the support activities in Porter’s Value Chain?
Procurement
Technology development
Human resource management
Firm infrastructure
Assessing strategic capability - Value Chain Analysis - Margin
What does the “margin” represent in a value chain analysis?
The excess the customer is willing to pay over the cost to the firm of obtaining resources and providing value activities.
Assessing strategic capability - Value Chain Analysis - Benchmarking
What is benchmarking used for in an organization?
To evaluate organizational performance in relation to best practices, helping quantify the effects of process improvements.
Assessing strategic capability - Gap Analysis
What is gap analysis?
A comparison between an organization’s ultimate objectives and expected performance, identifying how to close any performance gaps.
Assessing strategic capability - SWOT analysis
What does a SWOT analysis help an organization achieve?
It helps match strengths with market opportunities, develop strategies to convert weaknesses into strengths, and identify threats to convert into opportunities.
Assessing strategic capability - SWOT analysis
What are the four quadrants in SWOT analysis?
Strengths
Weaknesses
Opportunities
Threats
Assessing strategic capability - McKinsey 7S Framework
What are the seven elements in the McKinsey 7S framework?
Strategy
Structure
Systems
Shared values
Style
Staff
Skills
Assessing strategic capability - McKinsey 7S Framework
What are the hard and soft elements of the McKinsey 7S framework?
Hard elements: Strategy, Structure, Systems
Soft elements: Shared values, Style, Staff, Skills
Managing strategic capability
How can an organization develop its strategic capabilities?
Through adding new resources, using organizational learning, aligning existing resources to create new capabilities, and forming strategic alliances.
Managing strategic capability
What are key methods for managing human capital to enhance strategic capability?
Skill development
Targeted training
Succession planning
Developing a dynamic team environment
Managing strategic capability
Why can becoming over-reliant on human capital be dangerous?
It can create risks if the organization depends too heavily on individuals for competitive advantage.
Managing strategic capability
What are the three categories of money as a resource?
Profitability
Wealth
Liquidity
Managing strategic capability
What risks arise from insufficient liquidity in an organization?
Insufficient cash flow can prevent the organization from paying creditors and employees on time, leading to financial instability
